Facebook Social Ads: A Referral Program by any other Name

Facebook has unveiled the Social Ads system that enables advertisers use your friends’ endorsements to woo you in purchasing their products and services.

Businesses will create their Facebook pages just like Facebook users and slather those pages with texts, photos, videos, and applications. Members will interact with these pages, e.g. booking a hotel room or uploading a vacation picture in the company’s wall, etc., and the interaction information will spread to other users through the members’ social graphs. Users can become fans of businesses and refer those businesses to their contacts.

Facebook places a cookie in your computer when you log in. That cookie will be used to track you when you visit one of the Social Ads network site. The Social Ads will allow members to share their actions on third party sites using the Facebook news feed.

For example, If you book an airline ticket in MyCheapAirTicket, a Facebook advertisement affiliate site, you will have the option to drop this action in your Facebook news feed from MyCheapAirTicket site. Also, when a member of your social graph visits MyCheapAirTicket, the Social Ads will show your action on MyCheapAirTicket site.

Facebook has collected a massive amount of personal data of its members. Now it will use that data to target ads based on age group, demographics, preferences, hobbies, etc. The Social Ads will also turn users into unpaid sales agents for endorsing brands and products.

Free websites generate revenue from advertising. There is nothing wrong with that. However, Facebook is taking your personal data and providing that data to advertisers, albeit in aggregated formats. The claim is that advertisers will be able to better target their ads because they know who you are from your profile information and what you do from your social actions. Taking your private information and broadcasting it to the world is reminiscent of Orwellian Big Brother.

You will share ads, in the guise of positive experience of a product, with your friends and fill up their Facebook news feeds with ads. If you do it too little, advertisers will not like it. If you do it too much, your friends will unfriend you quickly.

A contextual ad system like Google’s AdSense detaches your personal information and focuses on what you are interested in at the very moment you land on a web page. You have the choice to run away from the site, get the information you want and not look at the ads, or click a few ads to acquire more information on the the topic you are exploring. It also provides monetary help to publishers who put hard works in creating, developing, and maintaining free ad supported websites.

In contrast, the Social Ads will rely on your personal information and make you an advocate for the businesses. Business will reap benefits from your likes without compensating you. And once they compensate you, your likes are no longer unbiased.

Also, your friends’ likes may not be the same as your needs. You may be looking for an average quality, cheap camera and your friend has a strong attachment to a particular brand. There is no way you can always get the best product for your need from your online contacts’ recommendations.

In stead of developing an elaborate and sophisticated referral program while compromising members’ private data, Facebook could have implemented a simple shopping list application. Members list their shopping list, advertisers display contextual ads, and Amazon, CNET etc. provide product reviews based on the shopping list.

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